Trading Tips & Advice

My eBook

About You

Site Information

Best Day Trading Stocks

STOCKS FOR DAY TRADING

This page is about finding the best day trading stocks for you to trade on any particular day. You want to be an intraday stock trader, but where do you find the right stocks to trade? There are literally thousands on the NYSE and NASDAQ from which to choose. How do you pick them?

Well, this all depends on what kind of day trading you want to do.

LIST OF STOCKS IN ONE INDUSTRY

Some traders only trade a off a short list of stocks that they have become very familiar with.

For instance they might trade only 10 or 15 stocks in the semiconductor industry that have good average daily volume. Some might trade in an even smaller niche like semiconductor - integrated circuits. In this case, they might have on their watch list stocks like Intel, Qualcomm, RF Micro Devices, and they would probably have the index that's important to their particular industry on their screen too.....the Philadelphia Semiconductor Index (SOX).

A popular method of trading off a small watch list is to compare them against the industry index. For example, one might decide to take a long position in one of their watch list stocks if it is out performing the index. For some, the best day trading stocks of the day might be one like OPLK below.

A trader that's intimately familiar with Integrated Circuit stocks would've undoubtedly noticed what I just noticed a couple hours too late. On the left side of the chart below is SOX the semiconductor index and on the right is an integrated circuit stock, Oplink Communications (OPLK). Right after the first 5 minute bar today, SOX cascaded downward until around 10:30am when it hit bottom. OPLK on the other hand, formed a lateral, and did not even go below it's first 5 minute bar. It's obvious by OPLK's breakout, that semiconductor players were awake and ready to ponce on that one.

So, for some stock day traders, the term "best day trading stocks" refers to stocks that they know like the back of their hand. They know the product or services the companies are engaged in and they are in tune with any news that might effect their stocks.

DO YOU WANT TO TRADE ONLY ONE STOCK?

SPY & QQQQ DAY TRADING

Alright, so maybe keeping a watch list of certain industry related stocks isn't your game. Some traders are only interested in watching one particular stock or ETF all day.

That's similar to what many emini traders do. They trade highly liquid stock index futures like ES (emini S&P 500). They trade it day after day, week after week, many times a day.

So lets say this is what you want to do except with stocks instead of futures. You don't want things to be complicated, you want to look at only one trading instrument all day long. So which one do you choose?

Since you might be making a dozen or more trades during the day based on technical analysis, price patterns or indicators, and be going both long and short, you'll definitely want to trade something that trades with high average daily volume and is highly liquid with very tight bid and ask prices.

In my opinion, the best way to do this is to trade an Exchange Traded Fund (ETF) that has volume in the millions of shares. There are two that are very popular: SPY (S&P 500) and QQQQ (Nasdaq 100). Both have huge volume and very tight bid/ask spreads. Today, the average daily volume for QQQQ is 56 million shares. Trades both long and short are practically instantaneous.

The best day trading stocks are the ones that aren't going to give you a lot of slippage between the bid and the ask when use market orders. That's something you want to avoid if possible.

HOT STOCKS: GAPPERS, GAINERS & VOLUME

Not content to limit yourself to one, two or a dozen stocks? For many day traders the best day trading stocks are the ones that are in play at that very moment. These hot stocks you'll find very easily with any decent trading platform that can rank lists of stocks in real time according to %Change, Net Change, % Increase Volume or any other way that you care to sort them. Every day you'll see stocks that might normally trade with daily volume below 100k, all of a sudden explode to the first page of a sort on much higher volume, due to some recent news about the stock.

Whatever that news might be, earnings news, analysts upgrades.....it doesn't really matter. That stock is in play the whole day and often will trade on higher than average volume. Just being on the first or second page of a gainers list, first thing in the morning, creates even more volume in the stock due to the increased attention it receives from traders.

Some day trading platforms such as TradeStation allow you to create custom indicators for sorting stock lists and creating alerts limited only by your imagination.

So, what do you sort? You can sort your own custom-made lists of stocks, that are hand picked and entered by you according to whatever characteristics you think are important.

Or, you can use stock index lists, such as the S&P 500's list of 500 stocks, the Nasdaq's 100 stocks or the Russell Index component stocks. If you want a huge list of potential stocks to trade from, combine all the NYSE and NASDAQ stocks. One thing you'll need to be concerned with though is the volume and liquidity of some of the stocks that will come up on some lists like the Russell's components. There will be a lot of very thinly traded stocks that you'll have to filter out.

I took this screen shot (on the right) of the S&P 500 component stocks sorted for net change at around noon today. As you can see, most of them are already trading in the millions of shares. This sorted page and the next several pages down are where you can find many of the best day trading stocks for the day. These stocks for day trading are in play and will garner attention until the closing bell.

So if you're looking for the best day trading stocks of the day, this is a good place to look.